Dole plc — FY2022 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter filing; the provided text does not give clear Q4-only financial results. Dole operates globally in fresh fruit, diversified fresh produce and fresh vegetables. FY2022 comparisons are materially affected by the July 2021 merger: 2022 includes a full year of Legacy Dole, while 2021 includes its consolidated results only from July 29 onward.
Key financial results
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net revenue | $9.229 billion | $6.454 billion |
| Gross profit / margin | $594.7 million / 6.4% | $349.1 million / 5.4% |
| Operating income (loss) | $114.4 million | $(30.1) million |
| Net income attributable to Dole plc | $86.5 million; $0.91 diluted EPS | $(7.2) million; $(0.10) diluted EPS |
| Adjusted EBITDA | $337.7 million | $290.1 million |
| Cash from operating activities | $238.9 million | $16.4 million |
| Capital expenditures | $98.0 million | $65.4 million |
| Cash and cash equivalents at year-end | $228.8 million | $250.6 million |
| Gross debt | $1.251 billion | $1.380 billion |
| Net debt | $1.022 billion | $1.129 billion |
| Total available liquidity | $797.5 million | $733.6 million |
Revenue increased 43%, driven substantially by seven additional months of Legacy Dole results; management estimates that this added $2.9 billion. Foreign-exchange translation reduced revenue by $426.6 million. Adjusted EBITDA rose 16%, including an estimated $43.4 million incremental contribution from the additional Legacy Dole period, partly offset by currency effects. Adjusted EBITDA is a non-GAAP measure and should not be treated as a substitute for GAAP earnings or cash flow.
Operating cash flow improved partly due to higher net income and the new trade-receivables sales arrangement, which generated $206.9 million of initial gross proceeds. Cash declined by $21.7 million during the year. Year-end current assets were $1.605 billion and current liabilities $1.461 billion. Interest expense rose to $61.5 million from $27.0 million, reflecting a full year of acquisition-related debt and higher rates. Dole reported a $34.1 million income-tax benefit despite pretax income of $70.9 million; management cites jurisdictional earnings mix and tax items, including releases of uncertain-tax-position liabilities.
Segments and material changes
- Fresh Fruit: Revenue $3.047 billion; Adjusted EBITDA $212.2 million. EBITDA improvement reflected higher banana pricing and strong commercial cargo activity, partly offset by lower pineapple volumes in North America and higher input and freight costs.
- Diversified Fresh Produce—EMEA: Revenue $3.153 billion, down 6.8%, largely due to currency translation and divestitures; Adjusted EBITDA $114.7 million, down 10.4%. Excluding currency and portfolio changes, management reported higher revenue and EBITDA, supported by price increases and recovering foodservice activity.
- Diversified Fresh Produce—Americas & ROW: Revenue $1.966 billion; Adjusted EBITDA $44.3 million. Acquisition contributions lifted reported results, but underlying EBITDA was pressured by weaker South American apples, kiwis and grapes and lower North American raspberry pricing.
- Fresh Vegetables: Revenue $1.206 billion; Adjusted EBITDA loss of $33.4 million. Results were affected by the packaged-salad recalls, lower salad volumes, inflation and adverse weather. Dole agreed in January 2023 to sell this division for approximately $293 million in cash, subject to adjustments and closing conditions.
The 2022 result also included $15.8 million of exceptional recall-related costs (versus $17.6 million in 2021), $11.6 million of gains on asset sales and $41.1 million of purchase-accounting charges related to acquired biological assets and inventory. In 2021, merger and transaction costs were $30.1 million and equity-method earnings included Legacy Dole before consolidation.
Outlook, risks and contingencies
- Management said operating cash flow, available cash and borrowing facilities should be sufficient for near-term obligations and future capital needs. Planned 2023 capital expenditures focus on existing farms, production, IT and facility improvements; amounts are not contractual and projects may be scaled back.
- Dole expects net proceeds from the proposed vegetable-division sale to be used primarily for debt reduction. Closing is subject to regulatory approval and other customary conditions; the company cautions the transaction may be delayed or not completed.
- Management cited inflation in freight, packaging, labor, fuel and agricultural inputs; supply-chain constraints; foreign-exchange volatility; and uncertainty related to COVID-19 and the Ukraine conflict. Dole is pursuing price increases and operating efficiencies, but states the scale and duration of impacts cannot be reliably estimated.
- Weather, crop disease, pests, product contamination, customer and supplier concentration, labor availability, food-safety regulation, and debt and interest-rate exposure are significant business risks. FY2022 included recalls following possible Listeria contamination; all affected plants had returned to normal capacity by early Q2 2022.
- Goodwill and the DOLE brand had limited impairment headroom at the October 2022 test date: Fresh Fruit goodwill fair value was about 2% above carrying value, Americas & ROW about 5%, and the brand less than 1%. No impairment was recorded, but small adverse assumption changes could trigger charges.
- A foreign tax authority issued an approximately $30 million transfer-pricing assessment for tax year 2017; Dole is appealing and says payment is considered remote, while timing remains uncertain. DBCP litigation includes approximately 180 lawsuits and claimed worldwide damages of about $17.8 billion; management does not expect a material loss. In a separate former Shell site matter, a jury found a Dole subsidiary responsible for 50% of $266.6 million in cleanup costs; Dole appealed and management considers loss remote.
- As of December 31, 2022, Dole was in compliance with debt covenants. Approximately $700 million of debt was effectively converted from variable to fixed rates through swaps. Management estimated a 1% rate increase would raise net interest expense by $6.7 million.
- Internal control over financial reporting was ineffective because controls over review of manual journal entries remained a material weakness. KPMG issued an adverse opinion on internal control, while giving an unqualified opinion on the consolidated financial statements. The weakness did not result in an identified FY2022 misstatement; remediation is ongoing.
- A February 2023 ransomware attack involved unauthorized access to employee information; Dole reported limited operational impact and said it engaged cybersecurity experts and notified law enforcement.
Most important facts for investors to verify
- Separate the merger’s consolidation and acquisition effects from underlying growth when assessing revenue, earnings and segment trends.
- Track completion, final proceeds and debt-reduction impact of the fresh-vegetables sale, including any effect on future earnings and cash flow.
- Review recurring cash generation and liquidity, including the continuing use, costs and recourse exposure of receivables sales arrangements.
- Monitor debt maturities, variable-rate exposure, covenant headroom and whether the stated interest-rate hedges remain effective.
- Confirm remediation and independent testing of the manual-journal-entry control weakness.
- Follow developments in the tax appeal, former Shell site appeal, DBCP matters, food-safety claims and any further consequences of the cyber incident.
- Assess impairment headroom for goodwill and the DOLE brand, given sensitivity to discount rates and projected cash flows.